BNP Paribas cut down its silver price forecast for 2013 and 2014

March 17, 2013

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BNP Paribas revised last week its silver price forecast for 2013 and 2014. This change in expectations is on the back of the precious metals correlation factor. The forecast update was provoked by weakness in the gold price. In respect, the silver outlook was affected.

BNP Paribas cut by $2.75 an ounce its average silver price forecast for 2013. The present white metal’s price projections foresee a level of $31.35 per ounce by the end of 2013. The average silver price forecast for 2014 was lowered by $1.65 to $28.45 per ounce.

A precious metals strategist at BNP Paribas commented on the updated expectations of the bank. According to him, there is a brighter side even in the current situation. If the global economic outlook is to improve, there would be a rebound in industrial demand, which is widely expected by traders. Also, the jewelry demand will jump as gold is successfully substituted with silver. Though, there is one thing that is certain even at present – investment demand trough 2013-2014 will depend mostly on the gold forecasts.

Earlier this year, we have seen prior outflows from the yellow metal. At the same time, the investment demand has held up. Therefore, it seems very likely that investment demand for silver could calm down if the gold weakness is here to stay.

This deviation comes as a real surprise. That is because the silver investment demand is considered closely connected to the yellow metal sentiment. In respect, during the coming months a shift in tendencies can be expected. That is only if suppressed gold price performance outlooks prove to be right.

Even so, the investment demand for silver may become stronger n the second half of this year. Though, in the short term precious metals investors should be prepared for a tepid silver price performance. Later in the second half of 2013, it is very likely a rebound in the prices to occur. It is widely expected that the long-term gold rally will come to its end, once we enter 2014. In respect, the silver price forecast suggest that by that time the white metal’s price could be vulnerable to a sharp correction.